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About the SR&ED Program

What is SR&ED?

The Canada Revenue Agency (CRA) offers tax credit incentives and refunds for companies that perform Research and Development in Canada. The Scientific Research and Experimental Development (SR&ED) program was created in the mid-1980's to encourage technical development in Canada, and each year it provides an average of over $3 billion to companies located in Canada. In the simplest terms, the SR&ED program caters to companies that are involved in resolving technological issues in the course of developing new or improving existing products, processes, or services. Essentially, if you have developed or created a new process, product, or if you have improved an existing process or product, you are eligible for the SR&ED program.

While many other countries have similar programs, Canada's SR&ED program is one of the more lucrative of tax-incentive programs for companies performing research and development.

The Benefits of SR&ED

Qualified Canadian Controlled Private Corporations (CCPC’s) can receive up to 35% back of eligible expenditures incurred in the development of new or improved products or processes. Foreign owned or public corporations can qualify for a 20% tax credit on eligible expenditures.

Most Canadian provinces offer additional tax credits on qualified SR&ED expenditures. Depending on the province, SR&ED claimants can earn additional provincial SR&ED tax credits ranging from 10% to 37.5% of qualified expenditures.

The funds that you receive from the SR&ED program can be invested back into your business in the form of new equipment, new hires, expanding your facilities, taking on more challenging projects, or paying down debts.

An Example of What You Could Receive for a CCPC* in Ontario**
(Some conditions apply)
Total
SR&ED Expenditures    
Labour   $500,000
Overhead   $325,000
Materials   $125,000
Subcontracting   $50,000
Total Qualified Expenditures   $1,000,000
SR&ED Refunds    
Ontario Research & Development Tax Credit (ORDTC) 4.5% $45,000
Ontario Innovation Tax Credit 10% $95,500
Federal Investment Tax Credit 35% $300,825
Total SR&ED Benefit to You 44.1% $441,325
* CCPC – Canadian Controlled Private Corporation
** The provincial tax credits and rates of return vary from province to province. Read more about provincial tax credits